The document describes the procure to pay cycle and how digitization provides value. It discusses:
1) The traditional procure to pay cycle involving purchase orders, sales orders, goods receipts, invoices, and payments between buyer and supplier companies.
2) How digitizing the cycle using a shared ledger reduces duplicate data entry and validation, saving companies significant time and costs - specifically estimating 1550-2100 man days annually saved for a buyer processing around 5000 goods receipts daily.
3) Opportunities to further automate the goods receipt process by auto-populating receipt data from the blockchain ledger but still enabling validation of smart contracts to resolve any issues before finalizing the receipt.
P2 p enabled through blockchain sanjay badhai and rahul pasrija-cwin18_india
1. 1
Procure to Pay Cycle
SharedLedger
Purchase
Order
(Push)
Purchase
Order
(Pull)
Sales
Order
(Push)
Goods
Issue
(Push)
Invoice
(Push)
Invoice
(Pull)
Goods
Receipt
(Push)
Payment
Proposal
(Push)
Supplier Company Buyer Company
Logistics Provider
( Ship to Party : Customer) : Outbound delivery
Bank (Supplier bank)
Goods
Dispatched
(Push)
Payment
Done
(Push)
12
3
4
5
7
8
6
9
10
NA
Payment to Supplier
PO created with all
required data including
buyer/supplier
organization,
material/services details
and logistics provider.
Invoice received
from supplier and
posted
Goods Receipt
received from
Supplier and posted
Customer
Invoice
Goods
Issue
PO details pulled
from Blockchain. SO
created in Supplier
Company with all
required data
Save Purchase OrderPull Purchase Order
Save InvoiceCreate Sales Order
Post Goods Issue
Post Invoice
Post Goods Receipt
Save Payment Proposal
SAP Blockchain
Save Logistics Transaction Process Payment
2. 2
Value delivered by Digitization of Procure to Pay cycle
SharedLedger
Purchase
Order
(Push)
Purchase
Order
(Pull)
Sales
Order
(Push)
Goods
Issue
(Push)
Invoice
(Push)
Invoice
(Pull)
Goods
Receipt
(Push)
Payment
Proposal
(Push)
Supplier Company Buyer Company
12
3
4
5
8
6
9
Illustration – Value delivered for a buyer having ~5000 Goods Receipts in day
• Significant savings due to shared ledger and avoidance of duplicate data capture and validation at every stage large
part of which comes from GR (Goods Receipt) and IR (Invoice Receipt) transactions for Buyer company.
Notes
Data Capture and Validation time for 1 GR – 0.75 -1 min
Data Capture and Validation time for 1 IR – 0.75 – 1 min
Assuming 90% of time saved on GR and IR data capture and validation.
1550 – 2100
Man days per
annum savings
1550 – 2100
Man days per
annum savings
5. 5
Smart Contract Validation – To be discussed with Block chain team
Value delivered for a buyer having ~5000 Goods Receipts in day – To
be discussed with Block chain team
• Get the data from Blockchain ledger and autofill the GR . Post the
GR after validation of smart contract (business rules)
• In case of quantity mismatch , quality issue, Do not post the GR
automatically unless the issue is resolved through quality
inspection and agreed between Seller and Buyer company.